Background. Information about the costs, savings, and services utilization impacts of Department of Veterans Affairs (VA) mental health residential rehabilitation treatment services for Veterans of Operations Enduring Freedom (OEF) and Operation Iraqi Freedom (OIF) who have a post-traumatic stress disorder (PTSD) is critically needed. Residential treatment would be expected to result in greater receipt of psychotropic medications and outpatient services over sustained period of time as compared to other inpatient or outpatient PTSD care. As a result, residential treatment's greater costs may be offset by lower costs for other services. Aims. This retrospective observational study of OEF/OIF veterans admitted to PTSD residential, specialized PTSD outpatient, or PTSD inpatient treatment with a primary PTSD diagnosis (ICD-9 309.81) in fiscal years 2009 and 2010 (FY09 and FY10) has the following specific aims: 1) to assess the impacts of admission to PTSD-residential treatment on utilization of outpatient services, psychotropic medications, and acute care services, hours of provider contact, healthcare expenditures and VERA spending; 2) to examine whether the services utilization or expenditures impacts of residential treatment are mediated by a program's average length-of-stay or by patients' characteristics. For outpatient services, we examine mental health individual and group therapy and primary care. For acute care, we examine VA inpatient and emergency department use. For hours of provider contact, we examine contacts with psychiatrists, psychologists/social workers, general practitioners, substance abuse counselors, mental health nurses, and other nurses/physician assistants. Methods. An estimated 2671 unique OEF/OIF veterans with PTSD diagnoses were admitted to a PTSD- specialized residential treatment program in FY09 and FY10. Using propensity score matching and instrumental variables methods, we compare these patients' services utilization and costs-during two consecutive 6-month periods starting with their date of admission-to the study outcomes of two similar groups of OEF/OIF veterans. The first comparison group is OEF/OIF patients admitted to specialized outpatient PTSD services in FY09 or FY10. The second comparison group is OEF/OIF patients admitted with PTSD diagnoses to general psychiatric inpatient units. The study samples and clinical information are drawn from the National Center for PTSD database at the Northeast Program Evaluation Center (NEPEC). Data on services utilization, diagnoses, demographics, and VA service connection are drawn from the Medical SAS outpatient encounter and inpatient discharge files. Information on use of psychotropic medications and VA treatment costs will be drawn from Decision Support System (DSS) databases. Using propensity score matching, the comparison groups are selected to be similar to the group of interest (PTSD-residential patients) in terms of covariate means and standard deviations. Although propensity score matching can be used to adjust for group differences in measured covariates, it may not eliminate group differences in unmeasured confounders. To further minimize selection bias due to unmeasured confounders, instrumental variables estimation is used to estimate impacts of admission to residential treatment. Anticipated Impacts on Veteran's Healthcare. This is the first comparative economic and services utilization study of VA mental health residential treatment in more than a decade and the first ever of OEF/OIF veterans with PTSD. Synthesis of the empirical results and qualitative findings from key informant interviews may identify areas of unmet need in VA PTSD service delivery for OEF/OIF veterans and recommendations for enhancements of PTSD services through changes in VA healthcare policies, financing allocation, and/or program organization.